By: Carona S.B. No. 748
(In the Senate - Filed February 16, 2011;
February 23, 2011, read first time and referred to Committee on
Business and Commerce; March 7, 2011, reported adversely, with
favorable Committee Substitute by the following vote: Yeas 7, Nays
0; March 7, 2011, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 748 By: Carona
A BILL TO BE ENTITLED
AN ACT
relating to business entities and associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.002, Business Organizations Code, is
amended by adding Subdivisions (55-a), (69-c), (69-d), and (69-e)
and amending Subdivision (69-b) to read as follows:
(55-a) "National securities exchange" means an
exchange registered as a national securities exchange under Section
6, Securities Exchange Act of 1934 (15 U.S.C. Section 78f).
(69-b) "Person" means an individual or a corporation,
partnership, limited liability company, business trust, trust,
association, or other organization, estate, government or
governmental subdivision or agency, or other legal entity [has the
meaning assigned by Section 311.005, Government Code].
(69-c) "Plan of conversion" means a document that
conforms with the requirements of Section 10.103.
(69-d) "Plan of exchange" means a document that
conforms with the requirements of Section 10.052.
(69-e) "Plan of merger" means a document that conforms
with the requirements of Sections 10.002 and 10.003.
SECTION 2. Subsection (b), Section 6.101, Business
Organizations Code, is amended to read as follows:
(b) Subject to this code and the governing documents of a
domestic entity, the governing authority of the entity, in advance,
may provide a record date for determining the owners or members of
the entity, except that the date may not be earlier than the 60th
day before the date the action requiring the determination of
owners or members is originally to be taken.
SECTION 3. Subsection (a), Section 6.205, Business
Organizations Code, is amended to read as follows:
(a) Any photographic, photostatic, facsimile, or similarly
reliable reproduction of a consent in writing signed by an owner,
member, or governing person of a filing entity may be substituted or
used instead of the original writing for any purpose for which the
original writing could be used[, if the reproduction is a complete
reproduction of the entire original writing].
SECTION 4. Subdivision (1) and (2), Section 8.001, Business
Organizations Code, are amended to read as follows:
(1) "Delegate" means a person who, while serving as a
governing person of an enterprise, is or was serving [as a
representative of the enterprise] at the request of that enterprise
as a representative of [at] another enterprise, [or] another
organization, or [to] an employee benefit plan. A person is a
delegate to an employee benefit plan if the performance of the
person's official duties to the enterprise also imposes duties on
or otherwise involves service by the person to the plan or
participants in or beneficiaries of the plan.
(2) "Enterprise" means a domestic entity or an
organization subject to this chapter. The term includes[,
including] a predecessor enterprise [domestic entity or
organization].
SECTION 5. Subsection (d), Section 8.103, Business
Organizations Code, is amended to read as follows:
(d) With respect to a limited partnership, a vote of a
majority-in-interest of the limited partners in a vote that
excludes the interest held by each general partner who is not
disinterested and independent constitutes a determination under
Subsection (a)(4). For purposes of this subsection,
"majority-in-interest" means, with respect to limited partners,
limited partners who own more than 50 percent of the current
percentage or other interest in the profits of the partnership that
is owned by all of the limited partners.
SECTION 6. Subsection (d), Section 8.104, Business
Organizations Code, is amended to read as follows:
(d) With respect to a limited partnership, a vote of a
majority-in-interest of the limited partners in a vote that
excludes the interest held by each general partner who is not
disinterested and independent constitutes an authorization under
Subsection (b). For purposes of this subsection,
"majority-in-interest" means, with respect to limited partners,
limited partners who own more than 50 percent of the current
percentage or other interest in the profits of the partnership that
is owned by all of the limited partners.
SECTION 7. Subsection (d), Section 8.105, Business
Organizations Code, is amended to read as follows:
(d) Notwithstanding any authorization or determination
specified in this chapter, an enterprise may pay or reimburse, in
advance of the final disposition of a proceeding and on terms the
enterprise considers appropriate, reasonable expenses incurred by:
(1) a former governing person [managerial official] or
delegate who was, is, or is threatened to be made a respondent in
the proceeding;[,] or
(2) a present or former employee, [or] agent, or
officer who is not a governing person of the enterprise and who was,
is, or is threatened to be made a respondent in the proceeding.
SECTION 8. Section 8.151, Business Organizations Code, is
amended by adding Subsection (c-1) to read as follows:
(c-1) With respect to a limited partnership, a vote of a
majority-in-interest of the limited partners constitutes approval
of the owners for purposes of Subsection (c).
SECTION 9. Subsection (b), Section 9.007, Business
Organizations Code, is amended to read as follows:
(b) The application for registration must state:
(1) the partnership's name;
(2) the federal taxpayer [tax] identification number
of the partnership;
(3) the partnership's jurisdiction of formation;
(4) the date of initial registration as a limited
liability partnership under the laws of the jurisdiction [state] of
formation;
(5) the date the foreign entity began or will begin to
transact business in this state;
(6) that the partnership exists as a valid limited
liability partnership under the laws of the jurisdiction [state] of
its formation;
(7) the number of partners at the date of the
statement;
(8) each business or activity that the partnership
proposes to pursue in this state, which may be stated to be any
lawful business or activity under the laws of this state;
(9) the address of the principal office of the
partnership;
(10) the address of the initial registered office and
the name and address of the initial registered agent for service of
process required to be maintained under Section 152.904; and
(11) that the secretary of state is appointed the
agent of the partnership for service of process under the same
circumstances as set forth by Section 5.251 for a foreign filing
entity.
SECTION 10. Section 10.002, Business Organizations Code, is
amended to read as follows:
Sec. 10.002. PLAN OF MERGER: REQUIRED PROVISIONS. (a) A
plan of merger must be in writing and must include:
(1) the name of each organization that is a party to
the merger;
(2) the name of each organization that will survive
the merger;
(3) the name of each new organization that is to be
created by the plan of merger;
(4) a description of the organizational form of each
organization that is a party to the merger or that is to be created
by the plan of merger and its jurisdiction of formation;
(5) the manner and basis of converting or exchanging
any of the ownership or membership interests of each organization
that is a party to the merger into:
(A) ownership interests, membership interests,
obligations, rights to purchase securities, or other securities of
one or more of the surviving or new organizations;
(B) cash;
(C) other property, including ownership
interests, membership interests, obligations, rights to purchase
securities, or other securities of any other person or entity; or
(D) any combination of the items described by
Paragraphs (A)-(C);
(6) the identification of any of the ownership or
membership interests of an organization that is a party to the
merger that are to be canceled rather than converted or exchanged;
(7) the certificate of formation of each new domestic
filing entity to be created by the plan of merger;
(8) [(7)] the governing documents of each new domestic
nonfiling entity to be created by the plan of merger; and
(9) [(8)] the governing documents of each non-code
organization that:
(A) is to survive the merger or to be created by
the plan of merger; and
(B) is an entity that is not:
(i) organized under the laws of any state or
the United States; or
(ii) required to file its certificate of
formation or similar document under which the entity is organized
with the appropriate governmental authority.
(b) An item required by Subsections (a)(7)-(9) [(a)(6)-(8)]
may be included in the plan of merger by an attachment or exhibit to
the plan.
(c) If the plan of merger provides for a manner and basis of
converting or exchanging an ownership or membership interest that
may be converted or exchanged in a manner or basis different than
any other ownership or membership interest of the same class or
series of the ownership or membership interest, the manner and
basis of conversion or exchange must be included in the plan of
merger in the same manner as provided by Subsection (a)(5). A plan
of merger may provide for cancellation of an ownership or
membership interest while providing for the conversion or exchange
of other ownership or membership interests of the same class or
series as the ownership or membership interest to be canceled.
SECTION 11. Subsection (a), Section 10.008, Business
Organizations Code, is amended to read as follows:
(a) When a merger takes effect:
(1) the separate existence of each domestic entity
that is a party to the merger, other than a surviving or new
domestic entity, ceases;
(2) all rights, title, and interests to all real
estate and other property owned by each organization that is a party
to the merger is allocated to and vested, subject to any existing
liens or other encumbrances on the property, in one or more of the
surviving or new organizations as provided in the plan of merger
without:
(A) reversion or impairment;
(B) any further act or deed; or
(C) any transfer or assignment having occurred;
(3) all liabilities and obligations of each
organization that is a party to the merger are allocated to one or
more of the surviving or new organizations in the manner provided by
the plan of merger;
(4) each surviving or new domestic organization to
which a liability or obligation is allocated under the plan of
merger is the primary obligor for the liability or obligation, and,
except as otherwise provided by the plan of merger or by law or
contract, no other party to the merger, other than a surviving
domestic entity or non-code organization liable or otherwise
obligated at the time of the merger, and no other new domestic
entity or non-code organization created under the plan of merger is
liable for the debt or other obligation;
(5) any proceeding pending by or against any domestic
entity or by or against any non-code organization that is a party to
the merger may be continued as if the merger did not occur, or the
surviving or new domestic entity or entities or the surviving or new
non-code organization or non-code organizations to which the
liability, obligation, asset, or right associated with that
proceeding is allocated to and vested in under the plan of merger
may be substituted in the proceeding;
(6) the governing documents of each surviving domestic
entity are amended to the extent provided by the plan of merger;
(7) each new filing entity whose certificate of
formation is included in the plan of merger under this chapter, on
meeting any additional requirements, if any, of this code for its
formation, is formed as a domestic entity under this code as
provided by the plan of merger;
(8) the ownership or membership interests of each
organization that is a party to the merger and that are to be
converted or exchanged, in whole or part, into ownership or
membership interests, obligations, rights to purchase securities,
or other securities of one or more of the surviving or new
organizations, into cash or other property, including ownership or
membership interests, obligations, rights to purchase securities,
or other securities of any organization, or into any combination of
these, or that are to be canceled, are converted, [and] exchanged,
or canceled as provided in the plan of merger, and the former owners
or members who held ownership or membership interests of each
domestic entity that is a party to the merger are entitled only to
the rights provided by the plan of merger or, if applicable, any
rights to receive the fair value for the ownership interests
provided under Subchapter H; and
(9) notwithstanding Subdivision (4), the surviving or
new organization named in the plan of merger as primarily obligated
to pay the fair value of an ownership or membership interest under
Section 10.003(2) is the primary obligor for that payment and all
other surviving or new organizations are secondarily liable for
that payment.
SECTION 12. Subsection (a), Section 10.052, Business
Organizations Code, is amended to read as follows:
(a) A plan of exchange must be in writing and must include:
(1) the name of each domestic entity the ownership or
membership interests of which are to be acquired;
(2) the name of each acquiring organization;
(3) if there is more than one acquiring organization,
the ownership or membership interests to be acquired by each
organization;
(4) the terms and conditions of the exchange; and
(5) the manner and basis of exchanging the ownership
or membership interests to be acquired for:
(A) ownership or membership interests,
obligations, rights to purchase securities, or other securities of
one or more of the acquiring organizations that is a party to the
plan of exchange;
(B) cash;
(C) other property, including ownership or
membership interests, obligations, rights to purchase securities,
or other securities of any other person or entity; or
(D) any combination of those items.
SECTION 13. Subsection (a), Section 10.103, Business
Organizations Code, is amended to read as follows:
(a) A plan of conversion must be in writing and must
include:
(1) the name of the converting entity;
(2) the name of the converted entity;
(3) a statement that the converting entity is
continuing its existence in the organizational form of the
converted entity;
(4) a statement of the type of entity that the
converted entity is to be and the converted entity's jurisdiction
of formation;
(5) if Sections 10.1025 and 10.109 do not apply, the
manner and basis of converting the ownership or membership
interests of the converting entity into ownership or membership
interests of the converted entity;
(6) any certificate of formation required to be filed
under this code if the converted entity is a filing entity;
(7) the certificate of formation or similar
organizational document of the converted entity if the converted
entity is not a filing entity; and
(8) if Sections 10.1025 and 10.109 apply, a statement
that the converting entity is electing to continue its existence in
its current organizational form and jurisdiction of formation after
the conversion takes effect.
SECTION 14. Subsection (b), Section 10.354, Business
Organizations Code, is amended to read as follows:
(b) Notwithstanding Subsection (a), subject to Subsection
(c), an owner may not dissent from a plan of merger or conversion in
which there is a single surviving or new domestic entity or non-code
organization, or from a plan of exchange, if:
(1) the ownership interest, or a depository receipt in
respect of the ownership interest, held by the owner is part of a
class or series of ownership interests, or depository receipts in
respect of ownership interests, that are, on the record date set for
purposes of determining which owners are entitled to vote on the
plan of merger, conversion, or exchange, as appropriate:
(A) listed on a national securities exchange [or
a similar system]; or
(B) [listed on the Nasdaq Stock Market or a
successor quotation system;
[(C) designated as a national market security on
an interdealer quotation system by the National Association of
Securities Dealers, Inc., or a successor system; or
[(D)] held of record by at least 2,000 owners;
(2) the owner is not required by the terms of the plan
of merger, conversion, or exchange, as appropriate, to accept for
the owner's ownership interest any consideration that is different
from the consideration to be provided to any other holder of an
ownership interest of the same class or series as the ownership
interest held by the owner, other than cash instead of fractional
shares or interests the owner would otherwise be entitled to
receive; and
(3) the owner is not required by the terms of the plan
of merger, conversion, or exchange, as appropriate, to accept for
the owner's ownership interest any consideration other than:
(A) ownership interests, or depository receipts
in respect of ownership interests, of a domestic entity or non-code
organization of the same general organizational type that,
immediately after the effective date of the merger, conversion, or
exchange, as appropriate, will be part of a class or series of
ownership interests, or depository receipts in respect of ownership
interests, that are:
(i) listed on a national securities
exchange or authorized for listing on the exchange on official
notice of issuance; or
(ii) [approved for quotation as a national
market security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or a successor entity; or
[(iii)] held of record by at least 2,000
owners;
(B) cash instead of fractional ownership
interests the owner would otherwise be entitled to receive; or
(C) any combination of the ownership interests
and cash described by Paragraphs (A) and (B).
SECTION 15. Subsections (c) and (e), Section 10.355,
Business Organizations Code, are amended to read as follows:
(c) A notice required to be provided under Subsection (a) or
(b) must:
(1) be accompanied by a copy of this subchapter; and
(2) advise the owner of the location of the
responsible organization's principal executive offices to which a
notice required under Section 10.356(b)(1) or (3) [10.356(b)(2)]
may be provided.
(e) Not later than the 10th day after the date an action
described by Subsection (a)(1) takes effect, the responsible
organization shall give notice that the action has been effected to
each owner who voted against the action and sent notice under
Section 10.356(b)(1) [10.356(b)(2)].
SECTION 16. Subsections (b), (c), and (d), Section 10.356,
Business Organizations Code, are amended to read as follows:
(b) To perfect the owner's rights of dissent and appraisal
under Section 10.354, an owner:
(1) if the proposed action is to be submitted to a vote
of the owners at a meeting, must give to the domestic entity a
written notice of objection to the action that:
(A) is addressed to the entity's president and
secretary;
(B) states that the owner's right to dissent will
be exercised if the action takes effect;
(C) provides an address to which notice of
effectiveness of the action should be delivered or mailed; and
(D) is delivered to the entity's principal
executive offices before the meeting;
(2) with respect to the ownership interest for which
the rights of dissent and appraisal are sought:
(A) must vote against the action if the owner is
entitled to vote on the action and the action is approved at a
meeting of the owners; and
(B) may not consent to the action if the action is
approved by written consent; and
(3) [(2)] must give to the responsible organization a
demand in writing [notice dissenting to the action] that:
(A) is addressed to the president and secretary
of the responsible organization;
(B) demands payment of the fair value of the
ownership interests for which the rights of dissent and appraisal
are sought;
(C) provides to the responsible organization an
address to which a notice relating to the dissent and appraisal
procedures under this subchapter may be sent;
(D) states the number and class of the ownership
interests of the domestic entity owned by the owner and the fair
value of the ownership interests as estimated by the owner; and
(E) is delivered to the responsible organization
at its principal executive offices at the following time:
(i) not later than the 20th day after the
date the responsible organization sends to the owner the notice
required by Section 10.355(e) that the action has taken effect
[before the action is considered for approval], if the action was
approved by [is to be submitted to] a vote of the owners at a
meeting;
(ii) not later than the 20th day after the
date the responsible organization sends to the owner the [a] notice
required by Section 10.355(d)(2) that the action has taken effect
[was approved by the requisite vote of the owners], if the action
was approved by [is to be undertaken on] the written consent of the
owners; or
(iii) not later than the 20th day after the
date the responsible organization sends to the owner a notice that
the merger was effected, if the action is a merger effected under
Section 10.006.
(c) An owner who does not make a demand within the period
required by Subsection (b)(3)(E) or, if Subsection (b)(1) is
applicable, does not give the notice of objection before the
meeting of the owners [(b)(2)(E)] is bound by the action and is not
entitled to exercise the rights of dissent and appraisal under
Section 10.354.
(d) Not later than the 20th day after the date an owner makes
a demand under Subsection (b)(3) [this section], the owner must
submit to the responsible organization any certificates
representing the ownership interest to which the demand relates for
purposes of making a notation on the certificates that a demand for
the payment of the fair value of an ownership interest has been made
under this section. An owner's failure to submit the certificates
within the required period has the effect of terminating, at the
option of the responsible organization, the owner's rights to
dissent and appraisal under Section 10.354 unless a court, for good
cause shown, directs otherwise.
SECTION 17. Subsections (a), (d), and (e), Section 10.358,
Business Organizations Code, are amended to read as follows:
(a) Not later than the 20th day after the date a responsible
organization receives a demand for payment made by a dissenting
owner in accordance with Section 10.356(b)(3) [10.356], the
responsible organization shall respond to the dissenting owner in
writing by:
(1) accepting the amount claimed in the demand as the
fair value of the ownership interests specified in the notice; or
(2) rejecting the demand and including in the response
the requirements prescribed by Subsection (c).
(d) If the dissenting owner decides to accept the offer made
by the responsible organization under Subsection (c)(2), the owner
must provide to the responsible organization notice of the
acceptance of the offer not later than the 90th day after the date
the action that is the subject of the demand took effect [An offer
made under Subsection (c)(2) must remain open for a period of at
least 60 days from the date the offer is first delivered to the
dissenting owner].
(e) If, not later than the 90th day after the date the action
that is the subject of the demand took effect, a dissenting owner
accepts an offer made by a responsible organization under
Subsection (c)(2) or [if] a dissenting owner and a responsible
organization reach an agreement on the fair value of the ownership
interests, the responsible organization shall pay the agreed amount
not later than the 120th [60th] day after the date the action that
is the subject of the demand took effect [the offer is accepted or
the agreement is reached, as appropriate], if the dissenting owner
delivers to the responsible organization:
(1) endorsed certificates representing the ownership
interests if the ownership interests are certificated; or
(2) signed assignments of the ownership interests if
the ownership interests are uncertificated.
SECTION 18. Section 11.057, Business Organizations Code, is
amended by adding Subsection (f) to read as follows:
(f) "Majority-in-interest" means, with respect to all or a
specified group of partners, partners who own more than 50 percent
of the current percentage or other interest in the profits of the
partnership that is owned by all of the partners or by the partners
in the specified group, as appropriate.
SECTION 19. Section 11.402, Business Organizations Code, is
amended to read as follows:
Sec. 11.402. JURISDICTION TO APPOINT RECEIVER. (a) A
court that has subject matter jurisdiction over specific property
of a domestic or foreign entity that is located in this state and is
involved in litigation has jurisdiction to appoint a receiver for
that property as provided by Section 11.403.
(b) A district court in the county in which the registered
office or principal place of business of a domestic entity is
located has jurisdiction to:
(1) appoint a receiver for the property and business
of a domestic entity for the purpose of rehabilitating the entity as
provided by Section 11.404; or
(2) order the liquidation of the property and business
of a domestic entity and appoint a receiver to effect that
liquidation as provided by Section 11.405.
SECTION 20. Subsection (b), Section 11.404, Business
Organizations Code, is amended to read as follows:
(b) A court may appoint a receiver under Subsection (a) only
if:
(1) circumstances exist that are considered by the
court to necessitate the appointment of a receiver to conserve the
property and business of the domestic entity and avoid damage to
interested parties;
(2) all other requirements of law are complied with;
and
(3) the court determines that all other available
legal and equitable remedies, including the appointment of a
receiver for specific property of the domestic entity under Section
11.402(a) [11.402], are inadequate.
SECTION 21. Subsection (a), Section 21.109, Business
Organizations Code, is amended to read as follows:
(a) A shareholders' agreement authorized by this subchapter
ceases to be effective when shares of the corporation are:
(1) listed on a national securities exchange [or
similar system]; or
(2) [quoted on an interdealer quotation system of a
national securities association or successor system; or
[(3)] regularly traded in a market maintained by one
or more members of a national or affiliated securities association.
SECTION 22. Subchapter C, Chapter 21, Business
Organizations Code, is amended by adding Section 21.110 to read as
follows:
Sec. 21.110. OTHER SHAREHOLDER AGREEMENTS PERMITTED. This
subchapter does not prohibit or impair any agreement between two or
more shareholders, or between the corporation and one or more of the
corporation's shareholders, permitted by Title 1, this chapter, or
other law.
SECTION 23. Section 21.203, Business Organizations Code, is
amended by adding Subsection (c) to read as follows:
(c) This section and Sections 21.204 through 21.208 do not
invalidate or impair a corporation's right or power to grant an
enforceable nonstatutory preemptive right in:
(1) a contract between the corporation and a
shareholder or other person; or
(2) the governing documents of the corporation.
SECTION 24. Subsection (a), Section 21.206, Business
Organizations Code, is amended to read as follows:
(a) An action brought against a corporation, the board of
directors or an officer, shareholder, or agent of the corporation,
or an owner of a beneficial interest in shares of the corporation
for the violation of a preemptive right of a shareholder under
Sections 21.203 and 21.204 must be brought not later than the
earlier of:
(1) the first anniversary of the date written notice
is given to each shareholder whose preemptive right was violated;
or
(2) the fourth anniversary of the latest of:
(A) the date the corporation issued the shares,
securities, or rights;
(B) the date the corporation sold the shares,
securities, or rights; or
(C) the date the corporation otherwise
distributed the shares, securities, or rights.
SECTION 25. Subsection (b), Section 21.222, Business
Organizations Code, is amended to read as follows:
(b) It is a defense to an action brought under this section
that the person suing:
(1) has, within the two years preceding the date the
action is brought, sold or offered for sale a list of shareholders
or of holders of voting trust certificates [in consideration] for
shares of the corporation or any other corporation;
(2) has aided or abetted a person in procuring a list
of shareholders or of holders of voting trust certificates for the
purpose described by Subdivision (1);
(3) has improperly used information obtained through a
prior examination of the books and account records, minutes, or
share transfer records of the corporation or any other corporation;
or
(4) was not acting in good faith or for a proper
purpose in making the person's request for examination.
SECTION 26. Section 21.357, Business Organizations Code, is
amended to read as follows:
Sec. 21.357. RECORD DATE FOR PURPOSE OF SHAREHOLDERS'
MEETING [OTHER THAN WRITTEN CONSENT TO ACTION]. The record date for
the purpose of determining shareholders entitled to notice of or to
vote at a shareholders' meeting or any adjournment of the meeting,
as provided by the directors in accordance with Section 6.101, must
be at least 10 days before the date of the shareholders' meeting [on
which the particular action requiring the determination of
shareholders is to be taken].
SECTION 27. Subsection (a), Section 21.415, Business
Organizations Code, is amended to read as follows:
(a) The act of a majority of the directors present at a
meeting at which a quorum is present at the time of the act is the
act of the board of directors of a corporation, unless the act of a
greater number is required by the certificate of formation or
bylaws of the corporation or by this code.
SECTION 28. Section 21.418, Business Organizations Code, is
amended by amending Subsections (a) and (b) and adding Subsections
(d) and (e) to read as follows:
(a) This section applies [only] to a contract or transaction
between a corporation and:
(1) one or more [of the corporation's] directors or
officers, or one or more affiliates or associates of one or more
directors or officers, of the corporation; or
(2) an entity or other organization in which one or
more [of the corporation's] directors or officers, or one or more
affiliates or associates of one or more directors or officers, of
the corporation:
(A) is a managerial official; or
(B) has a financial interest.
(b) An otherwise valid and enforceable contract or
transaction described by Subsection (a) is valid and enforceable,
and is not void or voidable, notwithstanding any relationship or
interest described by Subsection (a), if any one of the following
conditions is satisfied [notwithstanding that the director or
officer having the relationship or interest described by Subsection
(a) is present at or participates in the meeting of the board of
directors, or of a committee of the board that authorizes the
contract or transaction, or votes or signs, in the person's
capacity as a director or committee member, a unanimous written
consent of directors or committee members to authorize the contract
or transaction, if]:
(1) the material facts as to the relationship or
interest described by Subsection (a) and as to the contract or
transaction are disclosed to or known by:
(A) the corporation's board of directors or a
committee of the board of directors, and the board of directors or
committee in good faith authorizes the contract or transaction by
the approval of the majority of the disinterested directors or
committee members, regardless of whether the disinterested
directors or committee members constitute a quorum; or
(B) the shareholders entitled to vote on the
authorization of the contract or transaction, and the contract or
transaction is specifically approved in good faith by a vote of the
shareholders; or
(2) the contract or transaction is fair to the
corporation when the contract or transaction is authorized,
approved, or ratified by the board of directors, a committee of the
board of directors, or the shareholders.
(d) A person who has the relationship or interest described
by Subsection (a) may:
(1) be present at or participate in and, if the person
is a director or committee member, may vote at a meeting of the
board of directors or of a committee of the board that authorizes
the contract or transaction; or
(2) sign, in the person's capacity as a director or
committee member, a unanimous written consent of the directors or
committee members to authorize the contract or transaction.
(e) If at least one of the conditions of Subsection (b) is
satisfied, neither the corporation nor any of the corporation's
shareholders will have a cause of action against any of the persons
described by Subsection (a) for breach of duty with respect to the
making, authorization, or performance of the contract or
transaction because the person had the relationship or interest
described by Subsection (a) or took any of the actions authorized by
Subsection (d).
SECTION 29. Section 21.453, Business Organizations Code, is
amended by adding Subsections (f) and (g) to read as follows:
(f) If after the adoption of a resolution under Subsection
(b) the board of directors of the corporation determines that the
plan of conversion is not advisable, the plan of conversion may be
submitted to the shareholders of the corporation with a
recommendation that the shareholders not approve the plan of
conversion.
(g) A plan of conversion for a corporation may include a
provision requiring that the plan of conversion be submitted to the
shareholders of the corporation, regardless of whether the board of
directors determines, after adopting a resolution or making a
determination under this section, that the plan of conversion is
not advisable and recommends that the shareholders not approve the
plan of conversion.
SECTION 30. Subdivision (1), Section 21.601, Business
Organizations Code, is amended to read as follows:
(1) "Issuing public corporation" means a domestic
corporation that has:
(A) 100 or more shareholders of record as shown
by the share transfer records of the corporation;
(B) a class or series of the corporation's voting
shares registered under the Securities Exchange Act of 1934 (15
U.S.C. Section 77b et seq.), as amended; or
(C) a class or series of the corporation's voting
shares qualified for trading on [in] a national securities exchange
[market system].
SECTION 31. Section 21.603, Business Organizations Code, is
amended to read as follows:
Sec. 21.603. BENEFICIAL OWNER OF SHARES OR OTHER [SIMILAR]
SECURITIES. (a) For purposes of this subchapter [chapter], a
person is a beneficial owner of shares or other [similar]
securities if the person individually, or through an affiliate or
associate, [beneficially owns,] directly or indirectly
beneficially owns the shares or other securities or has the right [,
shares or similar securities.
[(b) A beneficial owner of shares or similar securities is
entitled, individually or through an affiliate or associate,] to:
(1) acquire the shares or other [similar] securities
[that may be exercised] immediately or after the passage [of a
certain amount] of time according to an oral or written agreement,
arrangement, or understanding, or on the exercise of conversion
rights, exchange rights, warrants, or options;
(2) vote the shares or other [similar] securities
according to an oral or written agreement, arrangement, or
understanding; or
(3) [subject to Subsection (c),] acquire, hold or
dispose of, or vote the shares or other [similar] securities with
another person who individually, or through an affiliate or
associate, beneficially owns, directly or indirectly, the shares or
other [similar] securities.
(b) [(c)] A person, however, is not considered a beneficial
owner of shares or other [similar] securities for purposes of this
subchapter if:
(1) the shares or other [similar] securities are:
(A) tendered under a tender or exchange offer
made by the person or an affiliate or associate of the person before
the tendered shares or securities are accepted for purchase or
exchange; or
(B) subject to an agreement, arrangement, or
understanding that expressly conditions the acquisition or
purchase of shares or securities on the approval of the acquisition
or purchase under Section 21.606 if the person has no direct or
indirect rights of ownership or voting with respect to the shares or
other securities until the time the approval is obtained; or
(2) the agreement, arrangement, or understanding to
vote the shares:
(A) arises solely from an immediately revocable
proxy that authorizes the person named in the proxy to vote at a
meeting of the shareholders that has been called when the proxy is
delivered or at an adjournment of the meeting; and
(B) would [is] not be reportable on a Schedule
13D under the Securities Exchange Act of 1934 (15 U.S.C. Section 77b
et seq.), as amended, or a comparable or successor report.
SECTION 32. Subdivision (1), Section 21.701, Business
Organizations Code, is amended to read as follows:
(1) "Close corporation" means a domestic corporation
formed under this subchapter or governed by this subchapter because
of Section 21.705, 21.706, or 21.707.
SECTION 33. Subsection (a), Section 22.153, Business
Organizations Code, is amended to read as follows:
(a) Except as provided by Subsection (b) or by the
corporation's certificate of formation, a corporation with members
who have voting rights shall hold an annual meeting of the members
at a time that is stated in or determined in accordance with the
corporation's bylaws.
SECTION 34. Section 22.230, Business Organizations Code, is
amended by amending Subsections (a) and (b) and adding Subsections
(d) and (e) to read as follows:
(a) This section applies [only] to a contract or transaction
between a corporation and:
(1) one or more [of the corporation's] directors,
officers, or members, or one or more affiliates or associates of one
or more directors, officers, or members, of the corporation; or
(2) an entity or other organization in which one or
more [of the corporation's] directors, officers, or members, or one
or more affiliates or associates of one or more directors,
officers, or members, of the corporation:
(A) is a managerial official or a member; or
(B) has a financial interest.
(b) An otherwise valid and enforceable contract or
transaction is valid and enforceable, and is not void or voidable,
notwithstanding any relationship or interest described by
Subsection (a), if any one of the following conditions is satisfied
[notwithstanding that a director, officer, or member of the
corporation is present at or participates in the meeting of the
board of directors, of a committee of the board, or of the members
that authorizes the contract or transaction, or votes to authorize
the contract or transaction, if]:
(1) the material facts as to the relationship or
interest and as to the contract or transaction are disclosed to or
known by:
(A) the corporation's board of directors, a
committee of the board of directors, or the members, and the board,
the committee, or the members in good faith and with ordinary care
authorize the contract or transaction by the affirmative vote of
the majority of the disinterested directors, committee members or
members, regardless of whether the disinterested directors,
committee members or members constitute a quorum; or
(B) the members entitled to vote on the
authorization of the contract or transaction, and the contract or
transaction is specifically approved in good faith and with
ordinary care by a vote of the members; or
(2) the contract or transaction is fair to the
corporation when the contract or transaction is authorized,
approved, or ratified by the board of directors, a committee of the
board of directors, or the members.
(d) A person who has the relationship or interest described
by Subsection (a) may:
(1) be present at or participate in and, if the person
is a director, member, or committee member, may vote at a meeting of
the board of directors, of the members, or of a committee of the
board that authorizes the contract or transaction; or
(2) sign, in the person's capacity as a director,
member, or committee member, a written consent of the directors,
members, or committee members to authorize the contract or
transaction.
(e) If at least one of the conditions of Subsection (b) is
satisfied, neither the corporation nor any of the corporation's
shareholders will have a cause of action against any of the persons
described by Subsection (a) for breach of duty with respect to the
making, authorization, or performance of the contract or
transaction because the person had the relationship or interest
described by Subsection (a) or took any of the actions authorized by
Subsection (d).
SECTION 35. Section 101.054, Business Organizations Code,
is amended by amending Subsection (a) and adding Subsection (e) to
read as follows:
(a) Except as provided by this section, the following
provisions may not be waived or modified in the company agreement of
a limited liability company:
(1) this section;
(2) Section 101.101, 101.151, 101.206, 101.501,
101.602(b), or 101.613 [101.502];
(3) Chapter 1, if the provision is used to interpret a
provision or define a word or phrase contained in a section listed
in this subsection;
(4) Chapter 2, except that Section 2.104(c)(2),
2.104(c)(3), or 2.113 may be waived or modified in the company
agreement;
(5) Chapter 3, except that Subchapters C and E may be
waived or modified in the company agreement; or
(6) Chapter 4, 5, 7, 10, 11, or 12, other than Section
11.056.
(e) The company agreement may not unreasonably restrict a
person's right of access to records and information under Section
101.502.
SECTION 36. Section 101.106, Business Organizations Code,
is amended by adding Subsections (a-1) and (a-2) to read as follows:
(a-1) A membership interest may be community property under
applicable law.
(a-2) A member's right to participate in the management and
conduct of the business of the limited liability company is not
community property.
SECTION 37. Subchapter C, Chapter 101, Business
Organizations Code, is amended by adding Section 101.1115 to read
as follows:
Sec. 101.1115. EFFECT OF DEATH OR DIVORCE ON MEMBERSHIP
INTEREST. (a) For purposes of this code:
(1) on the divorce of a member, the member's spouse, to
the extent of the spouse's membership interest, if any, is an
assignee of the membership interest;
(2) on the death of a member, the member's surviving
spouse, if any, and an heir, devisee, personal representative, or
other successor of the member, to the extent of their respective
membership interest, are assignees of the membership interest; and
(3) on the death of a member's spouse, an heir,
devisee, personal representative, or other successor of the spouse,
other than the member, to the extent of their respective membership
interest, if any, is an assignee of the membership interest.
(b) This chapter does not impair an agreement for the
purchase or sale of a membership interest at any time, including on
the death or divorce of an owner of the membership interest.
SECTION 38. Subsection (a), Section 101.254, Business
Organizations Code, is amended to read as follows:
(a) Except as provided by this title and Title 1, each
governing person of a limited liability company and each officer
[or agent] of a limited liability company vested with actual or
apparent authority by the governing authority of the company is an
agent of the company for purposes of carrying out the company's
business.
SECTION 39. Section 101.255, Business Organizations Code,
is amended by amending Subsections (a) and (b) and adding
Subsections (d) and (e) to read as follows:
(a) This section applies [only] to a contract or transaction
between a limited liability company and:
(1) one or more [of the company's] governing persons or
officers, or one or more affiliates or associates of one or more
governing persons or officers, of the company; or
(2) an entity or other organization in which one or
more [of the company's] governing persons or officers, or one or
more affiliates or associates of one or more governing persons or
officers, of the company:
(A) is a managerial official; or
(B) has a financial interest.
(b) An otherwise valid and enforceable contract or
transaction described by Subsection (a) is valid and enforceable,
and is not void or voidable, notwithstanding any relationship or
interest described by Subsection (a), if any one of the following
conditions is satisfied [notwithstanding that the governing person
or officer having the relationship or interest described by
Subsection (a) is present at or participates in the meeting of the
governing authority, or of a committee of the governing authority,
that authorizes the contract or transaction or votes or signs, in
the person's capacity as a governing person or committee member, a
written consent of governing persons or committee members to
authorize the contract or transaction, if]:
(1) the material facts as to the relationship or
interest described by Subsection (a) and as to the contract or
transaction are disclosed to or known by:
(A) the company's governing authority or a
committee of the governing authority and the governing authority or
committee in good faith authorizes the contract or transaction by
the approval of the majority of the disinterested governing persons
or committee members, regardless of whether the disinterested
governing persons or committee members constitute a quorum; or
(B) the members of the company, and the members
in good faith approve the contract or transaction by vote of the
members; or
(2) the contract or transaction is fair to the company
when the contract or transaction is authorized, approved, or
ratified by the governing authority, a committee of the governing
authority, or the members of the company.
(d) A person who has the relationship or interest described
by Subsection (a) may:
(1) be present at or participate in and, if the person
is a governing person or committee member, may vote at a meeting of
the governing authority or of a committee of the governing
authority that authorizes the contract or transaction; or
(2) sign, in the person's capacity as a governing
person or committee member, a written consent of the governing
persons or committee members to authorize the contract or
transaction.
(e) If at least one of the conditions of Subsection (b) is
satisfied, neither the company nor any of the company's members
will have a cause of action against any of the persons described by
Subsection (a) for breach of duty with respect to the making,
authorization, or performance of the contract or transaction
because the person had the relationship or interest described by
Subsection (a) or took any of the actions authorized by Subsection
(d).
SECTION 40. Subsection (b), Section 101.357, Business
Organizations Code, is amended to read as follows:
(b) A manager or committee member of a limited liability
company[, if authorized by the company agreement,] may vote:
(1) in person; or
(2) if authorized by the company agreement, by a proxy
executed in writing by the manager or committee member, as
appropriate.
SECTION 41. Subsection (b), Section 101.611, Business
Organizations Code, is amended to read as follows:
(b) Section 101.206 [101.207] does not apply to a
distribution with respect to the series.
SECTION 42. Subsection (d), Section 151.003, Business
Organizations Code, is amended to read as follows:
(d) Receipt of notice by a general partner of a fact
relating to the partnership is effective immediately as notice to
the partnership unless fraud against the partnership is committed
by or with the consent of the partner receiving the notice.
SECTION 43. Subsection (a), Section 152.304, Business
Organizations Code, is amended to read as follows:
(a) Except as provided by Subsection (b) or Section
152.801(a), all partners are [liable] jointly and severally liable
for all obligations [a debt or obligation] of the partnership
unless otherwise:
(1) agreed by the claimant; or
(2) provided by law.
SECTION 44. Subchapter E, Chapter 152, Business
Organizations Code, is amended by adding Section 152.308 to read as
follows:
Sec. 152.308. PARTNER'S PARTNERSHIP INTEREST SUBJECT TO
CHARGING ORDER. (a) On application by a judgment creditor of a
partner or of any other owner of a partnership interest, a court
having jurisdiction may charge the partnership interest of the
judgment debtor to satisfy the judgment.
(b) To the extent that the partnership interest is charged
in the manner provided by Subsection (a), the judgment creditor has
only the right to receive any distribution to which the judgment
debtor would otherwise be entitled in respect of the partnership
interest.
(c) A charging order constitutes a lien on the judgment
debtor's partnership interest. The charging order lien may not be
foreclosed on under this code or any other law.
(d) The entry of a charging order is the exclusive remedy by
which a judgment creditor of a partner or of any other owner of a
partnership interest may satisfy a judgment out of the judgment
debtor's partnership interest.
(e) This section does not deprive a partner or other owner
of a partnership interest of a right under exemption laws with
respect to the judgment debtor's partnership interest.
(f) A creditor of a partner or of any other owner of a
partnership interest does not have the right to obtain possession
of, or otherwise exercise legal or equitable remedies with respect
to, the property of the limited partnership.
SECTION 45. Subsections (a) and (c), Section 152.406,
Business Organizations Code, are amended to read as follows:
(a) For purposes of this code:
(1) on the divorce of a partner, the partner's spouse,
to the extent of the spouse's partnership interest, if any, is a
transferee of the partnership interest [from the partner];
(2) on the death of a partner:
(A) if the partnership interest of the deceased
partner is subject to redemption under Subchapter H, the partner's
surviving spouse, if any, and an heir, devisee, personal
representative, or other successor of the partner, to the extent of
their respective right to the redemption price, are creditors of
the partnership until the redemption price is paid; or
(B) if the partnership interest of the deceased
partner is not subject to redemption under Subchapter H, the
partner's surviving spouse, if any, and an heir, devisee, personal
representative, or other successor of the partner, to the extent of
their respective partnership interest, are transferees of the
partnership interest[, the partner's surviving spouse, if any, and
an heir, legatee, or personal representative of the partner, to the
extent of their respective partnership interest, is a transferee of
the partnership interest from the partner]; and
(3) on the death of a partner's spouse, an heir,
devisee [legatee], [or] personal representative, or other
successor of the spouse, other than the partner, to the extent of
their respective partnership interest, if any, is a transferee of
the partnership interest [from the partner].
(c) This chapter does not impair an agreement for the
purchase or sale of a partnership interest at any time, including on
the death or divorce of an owner of the partnership interest.
SECTION 46. Subsection (b), Section 152.707, Business
Organizations Code, is amended to read as follows:
(b) In settling accounts among the partners, the
partnership interest of a withdrawn partner that is [not] redeemed
under Section 152.610 [Subchapter H] is credited with a share of any
profits for the period after the partner's withdrawal but is
charged with a share of losses for that period only to the extent of
profits credited for that period.
SECTION 47. Section 152.801, Business Organizations Code,
is amended to read as follows:
Sec. 152.801. LIABILITY OF PARTNER. (a) Except as
provided by [Subsection (b) or] the partnership agreement, a
partner [in a limited liability partnership] is not personally
liable to any person, including a partner, directly or indirectly,
by contribution, indemnity, or otherwise, for any [a debt or]
obligation of the partnership incurred while the partnership is a
limited liability partnership.
(b) [A partner in a limited liability partnership is not
personally liable for a debt or obligation of the partnership
arising from an error, omission, negligence, incompetence, or
malfeasance committed by another partner or representative of the
partnership while the partnership is a limited liability
partnership and in the course of the partnership business unless
the first partner:
[(1) was supervising or directing the other partner or
representative when the error, omission, negligence, incompetence,
or malfeasance was committed by the other partner or
representative;
[(2) was directly involved in the specific activity in
which the error, omission, negligence, incompetence, or
malfeasance was committed by the other partner or representative;
or
[(3) had notice or knowledge of the error, omission,
negligence, incompetence, or malfeasance by the other partner or
representative at the time of the occurrence and then failed to take
reasonable action to prevent or cure the error, omission,
negligence, incompetence, or malfeasance.
[(c)] Sections 2.101(1), 152.305, and 152.306 do not limit
the effect of Subsection (a) in a limited liability partnership.
(c) For purposes of this section, [(d) In this section,
"representative" includes] an obligation is incurred while a
partnership is [agent, servant, or employee of] a limited liability
partnership if:
(1) the obligation relates to an action or omission
occurring while the partnership is a limited liability partnership;
or
(2) the obligation arises under a contract or
commitment entered into while the partnership is a limited
liability partnership.
(d) Subsection [(e) Subsections] (a) does [and (b) do] not
affect:
(1) the liability of a partnership to pay its [debts
and] obligations from partnership property;
(2) the liability of a partner, if any, imposed by law
or contract independently of the partner's status as a partner; or
(3) the manner in which service of citation or other
civil process may be served in an action against a partnership.
(e) [(f)] This section controls over the other parts of this
chapter and the other partnership provisions regarding the
liability of partners of a limited liability partnership, the
chargeability of the partners for the [debts and] obligations of
the partnership, and the obligations of the partners regarding
contributions and indemnity.
SECTION 48. Subsections (a), (f), and (j), Section 152.802,
(f), and (j), Business Organizations Code, are amended to read as
follows:
(a) In addition to complying with Section [Sections]
152.803 [and 152.804], a partnership, to become a limited liability
partnership, must file an application with the secretary of state
in accordance with Chapter 4 and this section. The application
must:
(1) set out:
(A) the name of the partnership;
(B) the federal taxpayer [tax] identification
number of the partnership;
(C) the street address of the partnership's
principal office in this state or outside of this state, as
applicable; and
(D) the number of partners at the date of
application; and
(2) contain a brief statement of the partnership's
business.
(f) A registration may be withdrawn by filing a withdrawal
notice with the secretary of state in accordance with Chapter 4. A
certificate from the comptroller stating that all taxes
administered by the comptroller under Title 2, Tax Code, have been
paid must be filed with the notice of withdrawal. A withdrawal
notice terminates the status of the partnership as a limited
liability partnership from the date on which the notice is filed or
a later date specified in the notice, but not later than the
expiration date under Subsection (e). A withdrawal notice must:
(1) contain:
(A) the name of the partnership;
(B) the federal taxpayer [tax] identification
number of the partnership;
(C) the date of registration of the partnership's
last application under this subchapter; and
(D) the current street address of the
partnership's principal office in this state and outside this
state, if applicable; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
(j) A document filed under this subchapter may be amended by
filing an application for amendment of registration with the
secretary of state in accordance with Chapter 4 and this
subsection. The application for amendment must:
(1) contain:
(A) the name of the partnership;
(B) the taxpayer [tax] identification number of
the partnership;
(C) the identity of the document being amended;
(D) the date on which the document being amended
was filed;
(E) a reference to the part of the document being
amended; and
(F) the amendment or correction; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
SECTION 49. Subsection (b), Section 152.906, Business
Organizations Code, is amended to read as follows:
(b) In addition to the information required by Section
9.011, the certificate of withdrawal must:
(1) contain:
(A) the federal taxpayer [tax] identification
number of the partnership; and
(B) the date of effectiveness of the
partnership's last application for registration under this
subchapter; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
SECTION 50. Subsection (b), Section 152.910, Business
Organizations Code, is amended to read as follows:
(b) A partner of a foreign limited liability partnership is
not liable for an [a debt or] obligation of the partnership solely
because the partnership transacted business in this state without
being registered.
SECTION 51. Subsection (b), Section 152.911, Business
Organizations Code, is amended to read as follows:
(b) The application for amendment must contain:
(1) the name of the partnership;
(2) the taxpayer [tax] identification number of the
partnership;
(3) the identity of the document being amended;
(4) a reference to the date on which the document being
amended was filed;
(5) the part of the document being amended; and
(6) the amendment or correction.
SECTION 52. Subsection (a), Section 153.004, Business
Organizations Code, is amended to read as follows:
(a) Except as provided by this section, the following
provisions of Title 1 may not be waived or modified in the
partnership agreement of a limited partnership:
(1) Chapter 1, if the provision is used to interpret a
provision or define a word or phrase contained in a section listed
in this subsection;
(2) Chapter 2, other than Section 2.104(c)(2),
2.104(c)(3), or 2.113;
(3) Chapter 3, other than Subchapters C and E of that
chapter and Section 3.151 (provided, that in all events a
partnership agreement may not validly waive or modify Section
[Sections] 153.551 or unreasonably restrict a partner's right of
access to books and records under Section [and] 153.552); or
(4) Chapter 4, 5, 10, 11, or 12, other than Section
11.058.
SECTION 53. Section 153.103, Business Organizations Code,
is amended to read as follows:
Sec. 153.103. ACTIONS NOT CONSTITUTING PARTICIPATION IN
BUSINESS FOR LIABILITY PURPOSES. For purposes of this section and
Sections 153.102, 153.104, and 153.105, a limited partner does not
participate in the control of the business because the limited
partner has or has acted in one or more of the following capacities
or possesses or exercises one or more of the following powers:
(1) acting as:
(A) a contractor for or an officer or other agent
or employee of the limited partnership;
(B) a contractor for or an agent or employee of a
general partner;
(C) an officer, director, or stockholder of a
corporate general partner;
(D) a partner of a partnership that is a general
partner of the limited partnership; or
(E) a member or manager of a limited liability
company that is a general partner of the limited partnership;
(2) acting in a capacity similar to that described in
Subdivision (1) with any other person that is a general partner of
the limited partnership;
(3) consulting with or advising a general partner on
any matter, including the business of the limited partnership;
(4) acting as surety, guarantor, or endorser for the
limited partnership, guaranteeing or assuming one or more specific
obligations of the limited partnership, or providing collateral for
borrowings of the limited partnership;
(5) calling, requesting, attending, or participating
in a meeting of the partners or the limited partners;
(6) winding up the business of a limited partnership
under Chapter 11 and Subchapter K of this chapter;
(7) taking an action required or permitted by law to
bring, pursue, settle, or otherwise terminate a derivative action
in the right of the limited partnership;
(8) serving on a committee of the limited partnership
or the limited partners; or
(9) proposing, approving, or disapproving, by vote or
otherwise, one or more of the following matters:
(A) the winding up or termination of the limited
partnership;
(B) an election to reconstitute the limited
partnership or continue the business of the limited partnership;
(C) the sale, exchange, lease, mortgage,
assignment, pledge, or other transfer of, or granting of a security
interest in, an asset of the limited partnership;
(D) the incurring, renewal, refinancing, or
payment or other discharge of indebtedness by the limited
partnership;
(E) a change in the nature of the business of the
limited partnership;
(F) the admission, removal, or retention of a
general partner;
(G) the admission, removal, or retention of a
limited partner;
(H) a transaction or other matter involving an
actual or potential conflict of interest;
(I) an amendment to the partnership agreement or
certificate of formation;
(J) if the limited partnership is qualified as an
investment company under the federal Investment Company Act of 1940
(15 U.S.C. Section 80a-1 et seq.), as amended, any matter required
by that Act or the rules and regulations of the Securities and
Exchange Commission under that Act, to be approved by the holders of
beneficial interests in an investment company, including:
(i) electing directors or trustees of the
investment company;
(ii) approving or terminating an investment
advisory or underwriting contract;
(iii) approving an auditor; and
(iv) acting on another matter that that Act
requires to be approved by the holders of beneficial interests in
the investment company;
(K) indemnification of a general partner under
Chapter 8 or otherwise;
(L) any other matter stated in the partnership
agreement;
(M) the exercising of a right or power granted or
permitted to limited partners under this code and not specifically
enumerated in this section; or
(N) the merger, [or] conversion, or interest
exchange with respect to [of] a limited partnership.
SECTION 54. Subsection (b), Section 153.158, Business
Organizations Code, is amended to read as follows:
(b) Until an action described by Subsection (a) is taken,
the owner of the partnership interest of the withdrawn general
partner has the status of an assignee under Subchapter F[, Section
153.113, and Section 153.555].
SECTION 55. Subsection (b), Section 153.501, Business
Organizations Code, is amended to read as follows:
(b) The limited partnership may cancel under Section 11.152
an event requiring winding up arising from an event of withdrawal of
a general partner as specified in Section 11.058(b) if:
(1) there remains at least one general partner and the
partnership agreement permits the business of the limited
partnership to be carried on by the remaining general partners and
those remaining general partners carry on the business; or
(2) not later than one year after the event, all
remaining partners, or another group or percentage of partners
specified in the partnership agreement:
(A) agree in writing to continue the business of
the limited partnership [in writing]; and
(B) to the extent that they desire or if there are
no remaining general partners, agree to the appointment of one or
more new general partners.
SECTION 56. Section 153.504, Business Organizations Code,
is amended to read as follows:
Sec. 153.504. DISPOSITION OF ASSETS. On the winding up of a
limited partnership, its assets shall be paid or transferred as
follows:
(1) to the extent otherwise permitted by law, to
creditors, including partners who are creditors other than solely
because of the application of Section 153.207, for the payment or
the making of reasonable provision for payment to satisfy the
liabilities of the limited partnership;
(2) unless otherwise provided by the partnership
agreement, to partners and former partners to satisfy the
partnership's liability for distributions under Section 153.111 or
153.209; and
(3) unless otherwise provided by the partnership
agreement, to partners first for the return of their capital and
second with respect to their partnership interests, in the
proportions provided by Sections 153.208(a) and (b).
SECTION 57. Subsection (a), Section 153.551, Business
Organizations Code, is amended to read as follows:
(a) A domestic limited partnership shall maintain the
following records in its principal office in the United States or
make the records available in that office not later than the fifth
day after the date on which a written request under Section
153.552(a) is received:
(1) a current list that states:
(A) the name and mailing address of each partner,
separately identifying in alphabetical order the general partners
and the limited partners;
(B) the last known street address of the business
or residence of each general partner;
(C) the percentage or other interest in the
partnership owned by each partner; and
(D) if one or more classes or groups are
established under the partnership agreement, the names of the
partners who are members of each specified class or group;
(2) a copy of:
(A) the limited partnership's federal, state,
and local information or income tax returns for each of the
partnership's six most recent tax years;
(B) the partnership agreement and certificate of
formation; and
(C) all amendments or restatements;
(3) copies of any document that creates, in the manner
provided by the partnership agreement, classes or groups of
partners;
(4) an executed copy of any powers of attorney under
which the partnership agreement, certificate of formation, and all
amendments or restatements to the agreement and certificate have
been executed;
(5) unless contained in the written partnership
agreement, a written statement of:
(A) the amount of the cash contribution and a
description and statement of the agreed value of any other
contribution made by each partner;
(B) the amount of the cash contribution and a
description and statement of the agreed value of any other
contribution that the partner has agreed to make in the future as an
additional contribution;
(C) [the date on which additional contributions
are to be made or] the [date of] events requiring additional
contributions to be made or the date on which additional
contributions are to be made;
(D) the events requiring the winding up of the
limited partnership; and
(E) the date on which each partner in the limited
partnership became a partner; and
(6) books and records of the accounts of the limited
partnership.
SECTION 58. Section 200.317, Business Organizations Code,
is amended by amending Subsections (a) and (b) and adding
Subsections (d) and (e) to read as follows:
(a) This section applies [only] to a contract or transaction
between a real estate investment trust and:
(1) one or more [of the trust's] trust managers or
officers, or one or more affiliates or associates of one or more
directors or officers, of the trust; or
(2) an entity or other organization in which one or
more [of the trust's] trust managers or officers, or one or more
affiliates or associates of one or more directors or officers, of
the trust:
(A) is a managerial official; or
(B) has a financial interest.
(b) An otherwise valid and enforceable contract or
transaction described by Subsection (a) is valid and enforceable,
and is not void or voidable, notwithstanding any relationship or
interest described by Subsection (a), if any one of the following
conditions is satisfied [notwithstanding that the trust manager or
officer having the relationship or interest described by Subsection
(a) is present at or participates in the meeting of the trust
managers or of a committee of the trust managers that authorizes the
contract or transaction, or votes or signs, in the person's
capacity as a trust manager or committee member, a unanimous
written consent of trust managers or committee members to authorize
the contract or transaction, if]:
(1) the material facts as to the relationship or
interest described by Subsection (a) and as to the contract or
transaction are disclosed to or known by:
(A) the trust managers or a committee of the
trust managers, and the trust managers or committee of the trust
managers in good faith authorize the contract or transaction by the
approval of the majority of disinterested trust managers or
committee members, regardless of whether the disinterested trust
managers or committee members constitute a quorum; or
(B) the shareholders entitled to vote on the
authorization of the contract or transaction, and the contract or
transaction is specifically approved in good faith by a vote of the
shareholders; or
(2) the contract or transaction is fair to the real
estate investment trust when the contract or transaction is
authorized, approved, or ratified by the trust managers, a
committee of the trust managers, or the shareholders.
(d) A person who has the relationship or interest described
by Subsection (a) may:
(1) be present at or participate in and, if the person
is a trust manager or committee member, may vote at a meeting of the
trust managers, or of a committee of the trust managers, that
authorizes the contract or transaction; or
(2) sign, in the person's capacity as a trust manager
or committee member, a unanimous written consent of the trust
managers or committee members to authorize the contract or
transaction.
(e) If at least one of the conditions of Subsection (b) is
satisfied, neither the trust nor any of the trust's shareholders
will have a cause of action against any of the persons described by
Subsection (a) for breach of duty with respect to the making,
authorization, or performance of the contract or transaction
because the person had the relationship or interest described by
Subsection (a) or took any of the actions authorized by Subsection
(d).
SECTION 59. Subsections (b) and (f), Section 252.011,
Business Organizations Code, are amended to read as follows:
(b) A statement appointing an agent must contain:
(1) the name of the nonprofit association;
(2) the federal taxpayer [tax] identification number
of the nonprofit association, if applicable;
(3) the address in this state, including the street
address, if any, of the nonprofit association or, if the nonprofit
association does not have an address in this state, its address out
of state; and
(4) the name of the person in this state authorized to
receive service of process and the person's address, including the
street address, in this state.
(f) A statement appointing an agent may be canceled by
filing with the secretary of state a written notice of cancellation
executed by a person authorized to manage the affairs of the
nonprofit association. A notice of cancellation must contain:
(1) the name of the nonprofit association;
(2) the federal taxpayer [tax] identification number
of the nonprofit association, if applicable;
(3) the date of filing of the nonprofit association's
statement appointing the agent; and
(4) a current street address, if any, of the nonprofit
association in this state or, if the nonprofit association does not
have an address in this state, its address out of state.
SECTION 60. Section 402.003, Business Organizations Code,
is amended to read as follows:
Sec. 402.003. EARLY ADOPTION OF CODE BY EXISTING DOMESTIC
ENTITY. (a) A domestic entity formed before the effective date of
this code may voluntarily elect to adopt and become subject to this
code by:
(1) adopting the code by complying with the procedures
for approval, under prior law and its governing documents, of an
amendment to:
(A) its articles of incorporation, with respect
to a corporation or cooperative association;
(B) its regulations, with respect to a limited
liability company;
(C) its articles of association, with respect to
a professional association;
(D) its declaration of trust, with respect to a
real estate investment trust;
(E) its partnership agreement, with respect to a
partnership; or
(F) its primary governing document, with respect
to another type of domestic entity;
(2) if any of its governing documents, including its
certificate of formation, do not comply with this code, complying
with the procedures, under prior law and its governing documents,
to amend the noncomplying governing documents to comply with this
code, including filing with the filing officer in accordance with
Chapter 4 a certificate of amendment to cause its certificate of
formation to comply with this code; and
(3) if the domestic entity is a filing entity, filing
with the filing officer in accordance with Chapter 4 a statement
that the filing entity is electing to adopt this code.
(b) A domestic entity that elected to adopt and become
subject to this code as provided by Subsection (a) is not considered
to have failed to comply with Subsection (a)(2) because:
(1) the entity's governing documents do not state the
type of entity formed; or
(2) a circumstance described by Section 402.0051
applies.
SECTION 61. Section 402.004, Business Organizations Code,
is amended to read as follows:
Sec. 402.004. EARLY ADOPTION OF CODE BY REGISTERED FOREIGN
FILING ENTITY. (a) A foreign filing entity registered with the
secretary of state to transact business in this state before the
effective date of this code may voluntarily elect to adopt and
become subject to this code by filing with the secretary of state in
accordance with Chapter 4:
(1) a statement that the foreign filing entity is
electing to adopt this code; and
(2) an amendment to its application for registration
that would cause its application for registration to comply with
this code.
(b) A foreign filing entity that elected to adopt and become
subject to this code as provided by Subsection (a) is not considered
to have failed to comply with Subsection (a)(2) because:
(1) the application for registration or any amendment
to the registration:
(A) does not state the entity's type; or
(B) does not include the appointment of the
secretary of state as agent for service of process under the
circumstances provided by Section 5.251; or
(2) a circumstance described by Section 402.0051
applies.
SECTION 62. Section 402.005, Business Organizations Code,
is amended by adding Subsection (c) to read as follows:
(c) A domestic or foreign filing entity is not considered to
have failed to comply with Subsection (a)(3) or (4) because:
(1) the certificate of formation does not state the
type of entity formed;
(2) the application for registration or any amendment
to the registration:
(A) does not state the entity's type; or
(B) does not include the appointment of the
secretary of state as agent for service of process, notice, or
demand under the circumstances provided by Section 5.251; or
(3) a circumstance described by Section 402.0051
applies.
SECTION 63. Chapter 402, Business Organizations Code, is
amended by adding Section 402.0051 to read as follows:
Sec. 402.0051. EFFECT OF REFERENCES TO PRIOR LAW AND USE OF
SYNONYMOUS TERMS. (a) A governing document or a filing
instrument, including a certificate of formation or application for
registration, is not considered to have failed to conform to this
code if the governing document or filing instrument:
(1) contains a reference to prior law that was
applicable at the time of its filing or adoption;
(2) contains a provision that was authorized by prior
law at the time of its filing or adoption;
(3) includes a term or phrase described by Section
1.006; or
(4) includes a term or phrase from prior law that is
different from the corresponding term or phrase used in this code.
(b) A reference in a governing document or filing instrument
to a statute or provision of a statute in effect before January 1,
2010, that was repealed by this code is considered to be a reference
to the provision or provisions of this code that correspond to the
repealed statute or provision unless the governing document or
filing instrument expressly provides otherwise.
(c) An entity is not considered to have failed to comply
with this code if a governing document or filing instrument makes a
reference to prior law rather than to the corresponding provisions
of the prior law in this code.
(d) For purposes of this section, prior law includes a
predecessor statute to the prior law.
SECTION 64. The heading to Section 402.013, Business
Organizations Code, is amended to read as follows:
Sec. 402.013. REINSTATEMENT OF ENTITIES CANCELED, REVOKED,
DISSOLVED, INVOLUNTARILY DISSOLVED, SUSPENDED, OR FORFEITED UNDER
PRIOR LAW.
SECTION 65. Section 402.013, Business Organizations Code,
is amended by adding Subsections (b-1) and (b-2) to read as follows:
(b-1) On or after January 1, 2010, a domestic filing entity
whose existence has been voluntarily dissolved or involuntarily
dissolved under prior law or whose certificate of formation or
equivalent governing document has been canceled, revoked,
suspended, or forfeited under prior law may reinstate the entity in
accordance with this code.
(b-2) On or after January 1, 2010, a foreign filing entity
whose registration to do business has been canceled, revoked,
suspended, or forfeited under prior law may reinstate its
registration in accordance with this code.
SECTION 66. (a) In this section:
(1) "Governing document" has the meaning assigned by
Subdivision (36), Section 1.002, Business Organizations Code.
(2) "Prior law" has the meaning assigned by Section
401.001, Business Organizations Code.
(b) This section applies only to a domestic entity whose
existence has been voluntarily dissolved under prior law or whose
certificate of formation or equivalent governing document has been
canceled under prior law.
(c) The reinstatement of a domestic filing entity that was
filed in accordance with Chapter 11 and Section 402.003, Business
Organizations Code, after December 31, 2005, and before January 1,
2010, is validated in all respects as of the date on which the
reinstatement occurred.
SECTION 67. The following provisions of the Business
Organizations Code are repealed:
(1) Section 21.001;
(2) Subsection (i), Section 152.802; and
(3) Section 152.804.
SECTION 68. This Act takes effect September 1, 2011.
* * * * *